By: Ravi Sinha
Track2Realty Exclusive
The festivities around Navratra and Diwali are known to cheer up the sentiments of the property market. Reflection is always seen both in terms of upbeat mood of developers, as more launches are planned around this time, and the home buyers, as most of the bookings take place during this time. However, on the eve of Navratra this year, there is apprehension all around and it seems there are more questions in the minds of both the developers as well as home buyers than the possible answers that the market can provide.
Though a section of the developers are trying to put up a brave face by declaring “all is well” in the property market, the fact of the matter is that the repo rate hike by the Reserve Bank of India (RBI) by 25 bps on the eve of the festivals seems to have poured water on the spirit and expectations of the real estate sector. Reeling under the demand slump, inflationary pressure, liquidity crunch and rising inventories, they were thus far expecting the Navratra and Diwali to uplift the market sentiments and bring the prospective home buyers back to the market.
Many of the realtors have even called a black Navratra and Diwali ahead and maintain that the repo hike should have been avoided at least till the festive season. The actual figure of how far the sentiments has been eroded in the property market is something that will come post the festive season, but by all indications it seems the buying spree may not be seen in the coming festive season.
Facts speak for themselves. A sample survey conducted by Track2Realty, the real estate market tracker, in four key cities of Delhi-NCR, Mumbai, Bangalore and Kolkata indicates that home seekers are deferring planned purchase of property during Navratra and Diwali. Even those who have the sound repayment capabilities in hand are apprehensive of further rate hike. As many as 72 per cent are having second thoughts on property purchase this festive season, while almost the same number, 70 per cent, are apprehensive of their repayment capacity in the once again looming global financial uncertainties.
Kruti Jain, Director, Kumar Urban Development exudes optimism when she says after 15 days of Pitrupakcha, the Shubh Muhurat of Navratra starts after Ganesh Festival. During this festive season, home seekers who have plans to purchase will opt to buy or book homes. In India, home buying has always been a market that has been primarily driven by sentiment and these sentiments are high during festival season. And Navratri is very important and popular festival of India. From our past records these has been always a good time for home buying.
“The real estate sector in the city is not much disturbed by the Reserve Bank of India’s (RBI) announcement to increase the repo rates. Builders feel that increase in interest rate of home loans due to hike in repo rate would not adversely affect the sale of flats during the forthcoming festival season. It’s a market trend if repo rate is hiked now it definitely comes down within a year’s time. Impact of per lakh EMI is hardly makes a difference. Since the interest rates on loans are increasing constantly, prospective buyers have become immune to such developments. Customers have started planning to buy flats that would suit their pocket and preferred location of their choice,” she says.
Mayur Shah, Chief-Sales, Ackruti City agree with this. According to him in India property buying is attached with lots of emotions and due to this emotional connect, property buying increases during festivals. In past also we have seen good response from customers on Navratra, specially from Guajarati Customers and we expect the same this year too.
“We don’t think repo hike will effect serious buyers and first time End Users because in a span of 20 years, which is typically the period of a house loan, there are many times when interest rates go up and subsequently come down too. So the impact of volatility in interest rates tends to even out during the loan period. Perhaps buyers could look at smaller units or shift their preference to newer location to suit their budget. In our view interest rates are nearing their peak and we can expect the downward cycle to resume shortly,” says Shah.
Bharat Dhuppar, CMO, Omkar Realtors & Developers, however, feels repo rate hike has been a major dampener and there will be lesser number of launches compared to the last year.
“There would be an increase in buying but definitely nowhere close to the previous year. This Navratra we are expecting at least 30 per cent to 40 per cent fewer launches as compared to last year as well,” he says.
Kaizad Hateria, General Manager, Corporate Customer Relations & Sales Residential, Rustomjee has his own reasons to be optimistic. According to him gone are the days when buying around the festival period was only because of propitious reasons, the Indian homebuyer has become a lot more practical today.
“Another primary reason for choosing to buy a house around the festive time is that festival periods don’t only bring attractive offers but also means choosing from a plethora of property options. Keeping in mind all the factors and also the demand – supply gap in Mumbai, we expect festive season (August to October) to substantially increase transactions this year, he says.
Well, the sluggish market may give indications of heading southwards on the eve of Navratra, but the realtors seem to defy the trend with their optimism. If that optimism translates into actual sales, it may lead to the recovery of the realty market which in the year 2011 has not inspired confidence, thanks to constant repo rate hike, land acquisition issues and overall crisis of confidence in collective consciousness of buyers.
